Carmakers committed to SA despite GM’s exit

Car manufacturers say they are still committed to the South African market.

This comes after US carmaker General Motors (GM) announced its plans to dis-invest from the South African market. This is part of the group’s strategy to withdraw its operations in international markets.

GM confirmed to Fin24 that its decision was not influenced by local economic and political factors, such as the downgrade to junk status. GM embarked on a process to review its international operations, and its actions to improve its performance, as far back as 2013, when the group exited Australia, the carmaker said.

GM’s competitors shared similar sentiments about the local investment environment.

Matt Gennrich, General Manager of Communications at Volkswagen South Africa (VWSA), explained that the group takes long term investment decisions, which are not impacted by “short-term socio-political, economic issues”.

Last year VWSA invested R5.5bn toward new product development, with the new products expected to be launched to market next year, said Gennrich. He reiterated that VWSA is committed to the investment, and expects growth in the motor industry. VWSA produced close to 130 000 units in 2016, up from 123 000 in 2015.

Ford, which has been operating in South Africa since 1923, also said it would remain committed to growing its business in South Africa. The company sold 73 856 cars in South Africa in 2016.

So far for 2017, the motor company has sold 23 732 units, said corporate communications manager, Alisea Chetty. The company has doubled the amount of vehicles assembled at its Silverton Assembly Plant in Pretoria.

Regarding the low economic growth environment, Chetty said challenges such as market and political volatility, power supply concerns, underdevelopment of skills, poverty and unemployment are concerning. But the company remains bullish about the opportunities that still exist in the local market.
Diederik Reitsma, general manager of communications at BMW South Africa said his company was taking a long-term view regarding its investments. The company recently invested R6bn in its Rosslyn Plant in Pretoria.

In 2016, the Rosslyn plant produced 63 000 units. However, a volume below 63 000 is expected in 2017. “[This is] due to normal life cycle developments of the current BMW 3 Series and shutdowns for BMW X3 preparations,” he said.

City Press, reporting on GM’s recent performance, said that even though the manufacturer’s Struandale plant has the capacity to produce 100 000 units, it had not met the annual minimum production volume of 50 000 units since 2013.

Over the past four years, it produced 167 078 units, this is 40 000 units a year. This includes the Isuzu bakkies manufactured at the facility, City Press reported. In 2016, GM only produced 31 000 units.
This is 5% of the 604 000 units produced by the industry in 2016, according to the National Association of Automobile manufacturers if South Africa (Naamsa).

In a statement issued by GM South Africa on Friday, the group confirmed it commenced a Section 189 process, which may impact 589 employees.

By Lameez Omarjee for Fin24

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